The Wall Street Journal article yesterday contained some interesting information on Binder and Binder's operations. Their total revenues in 2010 were about $88 million, which is a stunning number, but almost as stunning to me was Binder and Binder's television advertising expenses, more than $20 million. As big as that number is, you must remember that television is only a part of their advertising expenditures. They also engage extensively in search engine marketing, which is also expensive. Their search engine marketing expenses are probably in the same ballpark as their television advertising expenses. This means that they are probably paying out something over 40% of their gross revenues on advertising. Spending that kind of money on advertising explains their service delivery problems. They have little money to spend on customer service after paying for all the ads.
How does Binder and Binder's advertising costs as a percent of their revenue compare to the average Social Security practice? I can only make a rough guess here but I think it safe to say that Binder and Binder is incredibly far off the chart.
Don't you have to wonder about any enterprise that spends such a huge percent of its revenues on advertising? Who else does this? Luxury retailers, maybe?
By the way, I'll also take a guess that Binder and Binder's profit margin is small. How can they have much profit, spending that much on ads? I wonder how well they''re doing in the current downturn in fee payments.